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Finance & funding

Why 66% of UK SMEs still don't apply for finance, and how to fix it in 10 minutes

These 5 myths are killing founder confidence. In this guide you will learn how to address them in 10 minutes.

Reading time 10 minutes
Category Business guides
Written by The bizbritain team
Two thirds of UK small business owners say they would borrow more if they understood their options better. Not that they were refused. Not that they did not want the money. They could not work out what they were looking at, so they left it.
New research from Portman Finance Group puts the cost of that hesitation at £54bn a year across the UK. Whatever you make of a number that big, the mechanism underneath it is real, and we see it every week: the barrier is almost never eligibility. It is that nobody has translated the market into plain English.
This guide is the translation. Ten minutes, no application, no phone call.

Section 01

The £54bn confidence gap

Portman surveyed 2,000 UK SMEs. What they found was not a shortage of appetite:
66%would be more likely to borrow with a clearer understanding of their options
53%find the business finance market confusing
52%do not have complete or high trust in the high-street banks for finance advice
30%have already missed a growth opportunity for want of finance
Read those together and a picture appears that does not match the usual story about small business lending. These are businesses that want to invest, believe finance exists, and are not applying because the process is opaque enough that doing nothing feels safer than getting it wrong.
The confusion is structural rather than a failure of attention. Four things make it genuinely hard:

  1. Near-identical names, different products

    Invoice discounting and invoice factoring. Hire purchase and a finance lease. A revolving credit facility and an overdraft. In each pair the difference is significant and the names give you no clue.

  2. Prices quoted in incompatible formats

    A flat fee, a factor rate and an APR cannot be compared side by side without converting them, and nobody converts them for you.

  3. Unpublished eligibility

    Criteria vary between lenders, change over time, and are mostly not on any website.

  4. Interested explanation

    Most guides to business finance are written by someone who sells one of the products in it. Including, to be fair, this one. More on that at the end.

Section 02

The five myths killing founder confidence

These are the five we hear most from first-time applicants. Each one stops people applying, and each one is either wrong or much narrower than it sounds.
Myth 01

“My credit score is not good enough”

The high-street banks cluster around a similar minimum score, and if you fall below it there, you fall below it at all of them, which is what makes a single rejection feel final.

Away from the high street the picture is different. Alternative lenders will consider applicants well below the high-street threshold, because they weight recent trading behaviour more heavily than a historic score. Start Up Loans assess affordability and the business plan alongside a credit check rather than filtering on a number.

A score is one input, and which lender you put it in front of matters more than the number itself.

Myth 02

“I have been trading too long for a start-up scheme”

This one costs people real money. Start Up Loans are available to businesses trading for up to 60 months. Five years.

We regularly speak to owners in year two who ruled themselves out eighteen months ago on the assumption that “start-up” meant pre-launch. They had three years of eligibility left and did not know it.

Myth 03

“The bank said no, so I am not fundable”

A decline tells you that one lender's criteria, on one day, did not fit your application. It is a routing result, not a verdict on the business.

Lenders genuinely want different things. Some care most about trading history, some about the assets in the business, some about who your customers are. A business that fails one test comfortably passes another, and the only way to find out is to ask the right one.

Myth 04

“I would have to sign a personal guarantee”

Sometimes, and it is a real consideration rather than a formality, because a guarantee switches off part of the protection a limited company gives you.

But it is not a single thing. Guarantees differ on whether they are capped, whether they are joint and several with other directors, what triggers them, and whether anything of yours is secured against them. And a guarantee demanded by one lender is not demanded by all of them. If one is on the table, that is information about how your application is being read, and it is worth understanding before you either sign it or walk away.

Myth 05

“Borrowing means giving up a piece of the business”

Debt and equity are different animals. An investor buys part of your company and keeps it. A lender is repaid and goes away.

Some products do not even sit against the company as a whole. Asset finance attaches to the equipment. Invoice finance attaches to the invoice, and is assessed substantially on your customers' creditworthiness rather than only on yours, which is why it sometimes works for businesses that a term loan would not.

Section 03

Fixing it in 10 minutes

Here is the exercise. It costs nothing, commits you to nothing, and puts you ahead of most first applications we see.
Min 1–3

Write down what the money is for, in one sentence

Not the amount. The purpose. “Cover the gap between paying suppliers and getting paid.” “Buy a second van.” “Fund three months of a new hire before they generate revenue.”

The purpose determines the product far more than the amount does, and it is the single question that most changes the answer you get.

Min 4–6

Work out the shape, not just the size

Three shapes cover most needs:

  • A lump you repay over time. For one-off investments with a long payback.
  • A facility you draw and repay repeatedly. For timing gaps that recur.
  • Funding attached to a specific thing. An asset, or an invoice.

Asking for the wrong shape is the most common reason a perfectly sound business gets a disappointing answer.

Min 7–8

Decide what you can actually service

Look at the last three months of bank statements and find the amount you could have paid every month without it hurting. That figure, not the amount you want, is what determines whether a facility is affordable, and it is the first thing an underwriter works out.

Min 9–10

Prepare the one question that cuts through pricing

Whatever format a cost is quoted in, ask:

What does this cost in pounds, in total, over the full term, including every fee?

That single question converts a flat fee, a factor rate and an APR into one number you can compare. Any lender or broker who will not answer it directly has told you something useful.

Section 04

Where we come in, and our own interest in this

We do not make the credit decision and we do not issue the money.
And since this guide opened by pointing out that most explanations of business finance are written by people who sell it, the same applies here. Portman commissioned research concluding businesses need brokers, and we are a broker telling you the same thing. Weigh it accordingly.
What we would say is that the ten minutes above is worth spending whether or not you spend it with us. If you do the exercise and decide to handle it yourself, you will handle it better. If you want someone to take it from there, that is the job: working out which product fits the purpose, and which lenders are currently comfortable with a business like yours.

Where do I start if I need finance now?

Start with the purpose, not the product. Write down what the money is for, how much you need, and over what period. Then compare every quote in pounds over the full term, including fees.

Turned down by the bank? What that actually means

A high-street no is common, and it is not the end of the road. For young businesses it is close to the default. Around two-thirds of Start Up Loans go to founders the mainstream banks turned down, by the British Business Bank’s own evaluation. A decline usually reflects the lender’s criteria, not your plan.

If your business is under five years old, start with our guide to the 2026 Start Up Loans eligibility checklist. If the worry is your credit file, read our guide to getting a Start Up Loan with bad credit.

If you would rather not do the comparing yourself, that is what a broker does. bizbritain is an FCA-authorised finance broker with a panel of 100+ lenders. Tell us the purpose on our business growth finance page and we will map the products that fit.

Figures as published by Portman Finance Group at the time of writing. Start Up Loans eligibility as published by the British Business Bank. This guide is general information, not financial advice. Applications are subject to status, affordability and lender criteria.

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